The European Commission today approved Hitachi’s $2.05 billion
acquisition of the hard-disk drive business unit of US
computer-manufacturing giant IBM. The IBM unit manufactures
hard-disk drives for all major applications, including servers,
desktops and notebook computers.
It is reported that Hitachi, which currently only manufactures hard
drives for the mobile and server markets, is expecting the
transaction to give it a leading position in hard-disk drives for
mobile applications.
The Commission decided that the transaction did not “raise
serious doubts as to its compatibility with the common market” and
reasoned that, because hard-disk products are highly standardised
and supply contracts are non-exclusive and short-term, the
change-over costs for customers would be low.
The Commission also found that the acquisition will not violate
European anti-trust rules, as the entry barriers into the mobile
market for incumbent hard-disk drive manufacturers are relatively
low.
Under a joint venture arrangement, Hitachi will initially
acquire a 70% stake in the IBM hard-disk drive division, which it
aims to fully own in three years. The new company will be based in
San Jose, California, and will employ approximately 24,000 staff at
11 locations worldwide.
